Feb. 5 (Bloomberg) -- Time Warner Inc.'s Jeffrey Bewkes may outline plans to sell parts of the world's largest media company when he addresses investors tomorrow for the first time since becoming chief executive officer.

Bewkes needs to get rid of AOL's shrinking business for dial-up Internet access and spin off a remaining 84 percent stake in the cable systems division, said Matt Kaufler, a fund manager at Clover Capital Management Inc. in Rochester, New York. Kaufler said he wants Time Warner to focus on movies and the company's CNN and HBO cable-television networks.

``It's time to get real about what this company is and isn't,'' said Kaufler, whose firm holds 1.2 million Time Warner shares among its $2.6 billion in assets. ``If he articulates a status quo strategy, that's a non-starter for shareholders.''

Overhauling the New York-based company may help Bewkes reverse a slide in Time Warner stock, the 10th-worst last year in the Standard & Poor's 100 Index. Without the AOL, cable systems and publishing divisions, the company would resemble Viacom Inc., the owner of MTV Networks and the Paramount film studio. Viacom shares advanced 7 percent last year.

Bewkes, 55, will hold a conference call with analysts and shareholders after releasing earnings before the market opens tomorrow. Time Warner may report fourth-quarter profit of 29 cents, according to the average of 17 analysts' estimates compiled by Bloomberg. Excluding year-earlier tax benefits and a gain from selling assets, the company earned 22 cents a share in the fourth quarter of 2006.

Ed Adler, a spokesman for Time Warner, declined to comment.

AOL Drag

Revenue in the quarter may have been little changed at $12.6 billion as declines at AOL offset gains from DVD sales and box-office receipts at the Warner Bros. film studio, analysts' estimates show. Bewkes is trying to transform AOL into an online advertising company to make up for customer losses in its traditional Web-access business.

``People are going to look at 2008 as the year in which the new AOL works or it doesn't,'' said Chris Marangi, a Rye, New York-based fund manager at Gamco Investors Inc., which owns 11.3 million Time Warner shares among its $30 billion in assets.

Marangi estimates Sumner Redstone's Viacom trades for nine times projected 2008 earnings before interest, taxes and non-cash expenses, compared with seven times for Time Warner.

Time Warner shares, down 29 percent in the past year, fell 44 cents, or 2.8 percent, to $15.40 at 4:01 p.m. in New York Stock Exchange composite trading. Sixteen analysts recommend buying Time Warner shares, while nine advise holding them. No one suggests selling.

Advertising Focus

Bewkes, who took the top job at Time Warner on Jan. 1, replacing Richard Parsons, is pushing a strategy to offer AOL e- mail and search services free to consumers to boost advertising on the site. AOL bought five businesses last year to increase its ad revenue and compete with Google Inc.

AOL's fate may be complicated by Microsoft Corp.'s $44.6 billion bid for Yahoo! Inc. last week. The offer threatens to eliminate two potential suitors and makes a partial sale, spinoff or partnership for AOL less likely, said Lehman Brothers Holdings Inc. analyst Anthony DiClemente in New York. He values AOL at $16.6 billion.

AOL probably lost 800,000 Web access customers in the fourth quarter, leaving it with 9.28 million subscribers at the end of last year, according to a Feb. 1 report from DiClemente. That led to a 33 percent drop in the unit's sales to $1.24 billion, he wrote. Ad sales may have gained 8.9 percent, while earnings before interest, tax, depreciation and amortization probably rose 19 percent to $351 million, he said.

Cable, Time Inc.

The market is expecting Time Warner this year to spin off Time Warner Cable Inc. or sell it, Marangi said.

Getting rid of the Time Inc. publishing division, ``an out- of-favor business,'' is another option, he said. The division publishes more than 125 magazines including Time and People.

Sales growth at the cable systems unit probably slowed in the fourth quarter as a housing slump and competition from telephone companies crimped demand.

Revenue may have increased 13 percent to $4.12 billion, while profit may have risen 16 percent to $1.54 billion, said Ingrid Chung, an analyst at Goldman Sachs Group Inc. in New York. She has a ``neutral'' rating on the shares and doesn't own any. Cable sales jumped 58 percent in the year-ago quarter, helped by the purchase of assets from Adelphia Communications Corp.

The film unit, maker of ``The Golden Compass,'' ``I am Legend,'' and ``Fred Claus'' movies and home videos including ``Hairspray'' and ``Ocean's Thirteen,'' probably led profit gains for the quarter, with a 35 percent increase to $323 million, Chung said.

The rise may buttress investors' case for Time Warner to anchor its business around the film studios and cable networks.

``The time has come to reshape the company the way it should be,'' Kaufler said. ``I want him to say `the days of the media conglomerate are over and we are going to aggressively evolve into a pure-play content company and here's the timeline.'''

To contact the reporter on this story: Gillian Wee in New York at gwee3@bloomberg.net.

Last Updated: February 5, 2008 16:09 EST